Hainan A New jourNey - Savills
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Cities and counties Real estate investment
Sustainable development
Incentives
Hainan
2021
A New journey
Hainan – Reimagined
Starting in 2018, Hainan began its journey to Hainan’s economy is expected to exceed
become a free trade port and a key gateway RMB2 trillion by 2035. An important node in
to the Pacific and Indian Oceans. The island China’s Belt and Road Initiative, the Hainan
province’s unique location, taxation and Free Trade Port (FTP) status is not only to
system advantages will bring unprecedented help boost the island’s economic development
development opportunities for Hainan. but also to help direct future reforms for the
According to the 14th Five Year Plan, Hainan Chinese mainland.
will target annual economic growth of over
10% per annum and an urbanisation rate of Significant changes are also afoot for Hainan’s
over 65% by 2025. Haikou and Sanya will be real estate market. Residential policies look to
the key drivers of growth, accounting for 60% curb speculative demand but support end-use
of the province’s population and 70% of its demand. The land market looks to augment
GDP. commercial and industrial development,
bringing with it more opportunities but also
As the economic makeup evolves and is more competition. Developers should pay
optimised, modern services and hi-tech heed to long-term policy goals and changes
industries are expected to take a leading and seize upon opportunities after thorough
role in future growth, reaching RMB350 due diligence.
and RMB150 billion by 2025, respectively.
Meanwhile, scientific and technological
breakthroughs are expected to be made in the
agriculture, marine and aviation sectors.
Contents
Overview 4
Cities and counties 6
Real estate 8
• Haikou commercial markets
• Sanya commercial markets
Sustainable development 12
• Building on a firm foundation – Tourism
• Enhancing industry – Modern services
• The future – Hi-tech
Incentives 18
• Corporates
• Individuals
2 3
Overview Overview
Infrastructure
Hainan completed its high-speed rail line in 2015, allowing visitors to travel the circumference of the island
in about three hours. The rail loop spans 653 km and connects all twelve coastal cities and counties, with
Railway additional stops at Haikou and Sanya airports. Another high-speed railway directly connecting Haikou with
Sanya is currently under planning.
Hainan boasted 1,254 km of expressway by the end of 2020. The island tourism road, expected to be
Expressway completed in 2023, will connect several key tourism hotspots.
Hainan currently has 24 seaports. The four largest ports are Haikou Port, Basuo Port, Yangpu Port and
Seaport Sanya Port.
Hainan has four civilian airports, namely Haikou Meilan International Airport, Sanya Phoenix International
Airport, Qionghai Bo’ao Airport and Sansha Yongxing Airport. Haikou and Sanya ranked 16th and 18th in
Airport
China by 2020 airport passenger traffic, respectively.
Six concepts
Free Trade Zone: Hainan is home to the people, (5) movement of transport and Offshore duty-free policy: Individuals
largest pilot FTZ in China out of a total (6) the secure flow of data; “1” refers travelling from Hainan to the mainland
of 21 FTZs that have been established to the building of a modern industrial can purchase a limited value and
by the end of 2020. While they are system; and “4” is strengthening the quantity of goods at offshore duty-free
all entitled to preferential taxes and institutional frameworks in the four shops and collect them from designated
other favourable regulations, they have areas of taxation, social governance, rule areas of airports, railway stations and
differentiated positionings aligned to of law and risk prevention and control. ports. The tax exemptions include
their respective strengths and focuses. tariff, import value-added tax and
Free flow across the first border, consumption taxes.
Free Trade Port: The Hainan FTP efficient control at the second
represents a key development goal border: The “first-border” refers to One Negative Three Positives: The
of Hainan by 2050. It requires policy China’s international customs border Hainan free trade port will establish
alignment with international markets where, apart from prohibited and one negative and three positives (“zero
Hainan in terms of market entry, a financial restricted imports and exports, goods tariffs”) lists by 2025. The negative list
framework and taxation, which will and articles can be freely imported is for enterprises importing equipment
allow free movement of trade elements, into, and exported from, Hainan. The for their own use, with goods not
including people, commodities, data and “second border” is between Hainan FTP detailed in the negative list being
Overview
capital. and Mainland China. Goods transiting exempt from tax. The positive lists
between Mainland China and the Hainan include transport vehicles; raw materials
6+4+1: The key elements of Hainan FTP FTP are subject to customs duties and for manufacturing purposes; and
can be summarized by “6+1+4”. Where “6” import/export-related taxes. This model commercial goods for consumption by
refers to liberalisation and facilitation is in effect at the Yangpu Bonded Port residents.
Hainan, China’s southernmost province, partners. The island also plays an major strategic projects; and (4) an of (1) trade, (2) investment, (3) cross- Area and will expand to the entire island
is the 28th largest provincial/municipal important role in the “Maritime Silk border capital flow, (4) movement of by the end of 2024.
international tourism and consumption
economy in China, with an output of Road”, providing an important platform centre. Development will focus on three
RMB553 billion in 2020, accounting for for cooperation in trade, logistics, major industries—tourism, modern
0.5% of the nation’s total. Despite its tourism and cross-border exchanges services and high-tech sectors.
Timeline of the Master Plan for Hainan Free Trade Port
comparatively small island economy, between China and other Belt and Road
Hainan has been the beneficiary countries. The Hainan Free Trade Port presents
of several reform and opening-up significant opportunities. 1,005
initiatives. China has seven special Hainan, according to the Master Plan foreign-invested enterprises (FIEs) 2025
2035
economic zones (SEZ), but Hainan is for the Construction of Hainan Free were established in Hainan in 2020, Have the free trade port system 2050
the only provincial-level SEZ (covers Trade Port, released in June 2020, nearly three times the number in 2019. basically in place; Have a mature operation of the Hainan
only Hainan Island, a main area under aims to develop three zones and one Meanwhile, utilised foreign direct Establish a leading business
Free Trade Port; High-level free trade port
Hainan’s administration). centre. Namely, (1) a pilot zone for investment (FDI) doubled to over US$3 environment in China; and Free and convenient exchange of with strong international
comprehensively deepening reform and billion. More domestic enterprises are Gradual improvement of the law
people, transportation and data; and influence established.
Hainan enjoys a favourable geography, opening up; (2) a national-level pilot also opening offices in Hainan, with and regulations adapted for the Establish a world-leading business
connecting the Greater Bay Area (GBA) zone for ecological civilization; (3) the plans to eventually tap into international construction of the free trade ports. environment.
with China’s Southeast Asian trading service guarantee zone for national markets.
4 5
Cities and counties Cities and counties
Cities and counties
Major economic indicators of Hainan by city/county, 2019
City/ GDP GDP per captica Population No. of above- Real estate Retail sales
County (mn RMB) (RMB) (10,000) scale industrial investment (mn RMB)
enterprises (mn RMB)
Haikou 167,193 72,218 233 157 48,073 78,558
Sanya
Haikou
Lingao 67,786 87,105 78 25 29,993 26,584
Chengmai
Wenchang
Danzhou 35,764 39,114 92 29 10,161 9,704
Danzhou
Ding'an Chengmai 33,018 66,413 57 49 6,543 6,472
Changjiang Tunchang Qionghai 28,330 54,630 52 11 5,477 10,981
Baisha 12
Qionghai Wanning 23,557 40,490 64 4,907 8,841
Wenchang 25,702 44,928 60 17 8,562 8,918
Dongfang Qiongzhong
Wuzhushan Dongfang 19,308 44,684 46 15 1,535 4,507
GDP 2019
Wanning (100 mn RMB)
Lingao 19,540 43,085 51 3 1,911 4,284
Ledong
Baoting Lingshui 18,320 54,562 39 7 9,883 3,490
Lingshui
Ledong 14,435 29,738 55 5 1,041 4,611
Sanya
Baisha 5,664 32,486 20 5 387 1,762
Baoting 5,571 36,258 17 1 1,514 1,736
Hainan province consists of four Economic Circle to drive economic third in economic output, one-fifth the
prefecture-level cities, five county-level development across the whole province. size of Haikou and half of Sanya, and Changjiang 12,632 53,798 26 22 758 2,820
cities, four counties and six autonomous second in terms of population, after
counties. Haikou and Sanya both have large Haikou. Danzhou has an abundance of
tertiary sectors accounting for more tropical agricultural resources while also Ding'an 10,442 34,890 35 17 1,241 2,996
Haikou and Sanya are the two largest than 70% of their local economies. being home to the Yangpu Economic
cities in Hainan in terms of economic Haikou’s tertiary sector, however, is Development Zone (EDZ) (calculatedly
output, accounting for 32% and 13% more evenly structured, with financial separately), an important industrial Qiongzhong 5,748 31,721 22 8 89 1,809
of Hainan's GDP in 2020, while being services and retail both accounting for manufacturing area. Danzhou and
home to 25% and 8% of its population, more than 17%, while Sanya is largely Yangpu EDZ economies combined are
Tunchang 8,565 31,721 31 4 555 2,857
respectively. They are at the core of supported by tourism and real estate. roughly the same size as Sanya.
Hainan’s 2015-2030 development master
plan, which focuses on the Northern Danzhou is the largest city in Hainan in 3,400 31,573 11 4 93 1,199
Wuzhishan
Hainan Comprehensive Economic terms of land area, accounting for 10%
Circle and the Southern Hainan Tourism of the island's area. Danzhou also comes
Source CEIC, Savills Research
6 7
Real estate Real estate
Innovative land policies in Hainan, 2020
Subject Content
Real estate January
Long-term rental
apartments
•
•
Encourage collectively-owned land to be developed into long-term rental apartments.
Give priority to the redevelopment of rural idle land, abandoned land, etc.
• Standard land can be sold through auction, on the basis of lease-first, transfer-later,
The real estate sector is a key recipient These various measures led to a fierce if demand doesn’t materialise Standard land flexible terms and other methods specified in the notice.
April
of Fixed Asset Investment (FAI) in significant increase in commercial as forecast. Grade A lettable office system • Land sales conditions can be tailored to individual use cases if the project brings
Hainan, accounting for 56% of the total and industrial land sales in 2019-2020 stock in Hainan is extremely limited, significant economic benefits.
in 2015, compared to 24% nationally. compared to 2017-2018, with a 2.2- with most projects having been sold
Investment in real estate development fold increase in commercial-zoned strata title. The emergence of quality • Small land plots can be bundled and sold together.
Point-like land
peaked in 2017 and has declined in land sold and an 8.1 fold increase in lettable stock will help meet the needs April • The total site area of bundled sites should not exceed 30 acres, with each plot generally
system
subsequent years, with its percentage industrial-zoned land, bringing their of larger institutions and high-growth not less than one acre in size.
of total FAI falling to 46% in 2019. ratios to 35 and 29%, respectively. In companies that require flexibility and
contrast, the share of residential zoned premium service quality. July
Residential land • Encourage the development of rental and affordable housing.
The decline in real estate development land fell from 41% to 29% over the management • Land sold at auction with land and home price caps.
investment is largely due to the local same period, with most of this being Corporate tenants and individuals have
government’s tighter restrictions on built as economic housing. become increasingly concerned about • Encourage a balanced mix of industrial, storage, R&D, office, commercial and other use
land use, which were put into effect health and the wider environment types.
October Industrial land
in 2018. Hainan introduced a series The forecast growth in demand in recent years. Hainan has required • Industrial land can be supplied in the form of long-term lease, lease-first, transfer-later, a
of policies in 2019 to kick start the resulting from the establishment of residential buildings larger than 1,000 combination of lease and transfer and flexible terms.
development of 31,000 mu (roughly the FTP will be met with a significant sq m, or more than five floors, as well
20.6 sq km) of land, which also has increase in office, industrial and as public facilities and commercial • Promote the launch of urban villages, urban border villages, village collective
Comprehensive
the possibility of converting land warehouse space over the mid-to-long premises larger than 20,000 sq m November
land management
enterprises (factories), agricultural reclamation enterprises and other contiguous
zoning to industrial/R&D usage. term, helping to keep rental growth to meet green building standards. development areas onto the land sales market, in accordance with laws and regulations.
Hainan continued to explore ways of in check. Developers and landlords, These are also in alignment with the
Source Savills Research
optimising land usage and allocation of however, will need to pay attention national goal of building an ecological
land resources in 2020. to launch dates and positioning as civilisation pilot zone in Hainan.
competition for tenant could prove Residential regulations have been tightened significantly. Hainan has halted development in the four ecologically sensitive areas in
the central region as well as the development of commodity residential along coastline. Since the implementation of house purchase
restrictions in 2018, supply and transaction volumes have declined. Commercial residential transaction units fell 11.4% and 38.1% YoY
Land transacted area (GFA) in Hainan, 2010-2020 in Haikou and Sanya respectively, though prices rose by 4.2% and 9.6%. Given limited supply and a growing economy, the long-term
prospects for the residential market remain decidedly positive.
Other Industrial Office Residential
40
Regulations on residential market in Hainan
Subject Content
• After July 1, 2017, commercial residential projects must be fully furnished in order to obtain a sales
30
Fully decorated
permit.
Unit area • Construction of commodity residential with unit sizes smaller than 100 sqm (inclusive) to be halted.
• (Haikou) It is strictly forbidden to change the building usage, especially to residential design. No
mn sq m
Business reform external balconies. Projects should have public corridors and toilets.
20
• Office space sold to an individual should not be less than 150 sqm.
Existing home sales • No pre-sales allowed for land acquired after March 8, 2020 .
• Sanya: Online pricing must be strictly followed; online filing must be in the same month as contract
10 signing.
Prices
• Haikou: Unauthorized price adjustments are not allowed after filing; online filing must be within 30
days of contract signing.
• Non-Hainan households can purchase a maximum of one unit; Hainan households can purchases a
maximum of two.
House purchase
0 • Non-Hainan households must have paid local social security or individual income tax for two years
restrictions
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 before purchasing. Five years of social security or individual income tax are required for some
jurisdictions in Sanya, Haikou and Qionghai.
Source CRIC, Savills Research
Source Savills Research
8 9Haikou commercial markets Sanya commercial markets
Haikou commercial markets Sanya commercial markets
Office Retail Office Retail
Haikou’s office market has developed rapidly in recent Haikou’s retail market started with department stores and they Sanya, as predominately a tourist city, has a relatively Sanya’s retail market, still at an early stage of development,
years thanks to both the favourable policy environment remain popular today. Nevertheless, new developments have underdeveloped office market, with only a handful of features a mix of shopping malls, department stores, retail
and improving economy, while new developments are been exclusively shopping malls since 2016. This has resulted in completed projects. These projects tend to be located streets, duty-free stores and outlet malls. With supply being
typically of Grade A standard. Haikou’s Grade A office a gradual change in the structure of the retail property market to along Yingbin Road, as well as in the Hedong and Hexi limited in recent years, shoppers still prefer established
stock stood at 1.0 million sq m at the end of 2020, while one that is now dominated by malls. The city’s total retail stock areas. Yingbin Road boasts the best developments in the department stores and retail podiums for the time being.
its vacancy rate was at 39.3%, down 9.0 percentage points stood at 1.2 million sq m by the end of 2020, with a citywide city, with stock in Hexi and Hedong primarily stratified
(ppts) YoY. Financial, professional services and real estate vacancy rate of 16.9%, up 4.3 ppts YoY. Grade B and C developments. Sanya had only 97,000 sq m There are six major retail precincts in Sanya, mostly along the
companies are still the main demand drivers. of Grade A office stock by the end of 2020, with a vacancy coast. Jiefang Road and Dadonghai are the oldest retail areas and
Despite being relatively small, the Haikou market can still be rate of 29.5%. tend to serve local neighbourhoods. Sanya Bay, Yalong Bay and
Hainan has three key business areas, of which Binhai and separated into ten distinct retail precincts. Of the four prime Haitang Bay cater to tourist needs, with Haitang Bay positioned
Guomao are the most mature, while Dayingshan, situated downtown precincts, Jiefang Rd and Haixiu are the oldest, As the tertiary sector continues to grow and investment slightly higher than the other two. Meanwhile, Yingbin Road
close to the provincial government headquarters, is still while Guomao-Binhai and Dayingshan have benefited from pours in from financial services firms and SOEs on the targets white-collar workers in the city’s central business
emerging. Future development is expected to spread east the continued development of the surrounding office markets. back of policy support, office leasing demand should district. Sanya has 424,000 sq m of shopping mall space at the
and west into the Jiangdong New Area and West Coast, Emerging retail areas have emerged in response to new urban pick up, and tenants upgrade to Grade A premises as end of 2020, with a citywide vacancy rate of 15.7%.
respectively, as the establishment of Hainan’s industrial planning, such as the West Coast, or target large, prosperous these become available. Future Grade A office supply,
park network creates new business opportunities. High- residential communities and Transportation Oriented concentrating along Yingbin Road, is expected to peak in Sanya’s retail market is heavily reliant upon the tourism
quality office stock in these areas is incredibly limited at Developments (TODs), such as East Railway Station-Yingbin Rd, 2022, with total stock expected to increase seven-fold in industry. More malls are specifically targeting tourists and are
the moment, but new developments are in the pipeline. Xiuying and Mission Hills. the next five years. offering experiential tenant mixes heavily weighted towards the
F&B, leisure and entertainment trades. Sanya has benefited from
Preferential tax policies are expected to attract numerous Favourable policies and improving market confidence will see a lack of outbound tourism over the last year, attracting throngs
services firms and technology enterprises to set up more well-known brands and operators explore new opportunities of domestic tourists looking for a substitute to Bali, Phuket or
premises and help grow their businesses, driving further or expand market presence in Haikou, bringing new dynamism to Halong Bay. Additionally, duty-free stores and outlets have also
demand for the city’s rapidly growing Grade A office the market. Several large retail centres are in the works, including attracted those looking to replace trips to Hong Kong, Dubai or
market. projects from China Resources, Longfor and OCT Group. The Jeju.
upgrade and increasing range of options available will be sure to
attract both domestic and international retailers.
10 11Sustainable development Sustainable development
Fullsing Town Internet
Key industrial parks in Hainan Innovation Park
City Haikou
Hainan’s economy is small, at RMB553.3 billion in 2020,
Haikou Jiangdong New Area
Leading industry Hi-tech and its GDP is just 5% the size of Guangdong’s economy.
Yangpu Economic Development Zone
Key subsectors Digital
City Haikou The economic makeup of each city can vary significantly.
City Danzhou area
Leading industry Modern service Over 80% of Haikou’s economic output comes from the
Leading industry Hi-tech tertiary sector. Sanya also has a larger tertiary industry
Key subsectors Airport, service, ecology
but is more reliant on tourism. Danzhou has a larger
Oil & gas, logistics, ocean
Key subsectors
equipment primary industry (agriculture), while Yangpu EDZ (within
Danzhou’s boundaries but usually listed separately in
Yangpu Economic Development Zone statistics) is one of the provinces’ largest industrial bases.
(Lingao Jinpai Port Lingang Industrial Haikou Integrated Free Trade Zone Wenchang International
Park) Haikou
Aerospace City
City
City Wenchang
The Hainan government identified twelve key industries
Leading industry Modern service in 2015 as important drivers of the economy. Output from
Leading industry Hi-tech these industries accounted for 66.1% of Hainan’s GDP
Bonded manufacturing, bonded
Key subsectors logistics, cross-border e-commerce, Key subsectors Aerospace technology in 2020, up 3.2 ppts YoY. The tourism and the Meetings,
completed car import
Incentives, Conventions and Exhibitions (MICE) sectors
were greatly affected by COVID-19 in 2020, but other
Hainan Resort Software
Community sectors, including internet, medical and cultural, saw
Lecheng International Medical Tourism
City Haikou growth rates accelerate.
Pilot Zone
Leading industry Hi-tech City Bo'ao
Tourism, modern services and hi-tech sectors were
Yangpu Economic Development Zone Key subsectors Internet Leading industry Modern service identified as leading industries and a key focus for the
(Dongfang Lingang Industrial Park) FTP going forwards; they also overlap with the twelve
Medical care, medical
Key subsectors
Haikou National High-tech Industrial tourism key industries identified in 2015. In 2020, these three
Development Zone
leading industries accounted for 43% of provincial
Sanya Yazhou Bay Science and
City Haikou GDP. While tourism has been the traditional driver of
Technology City Leading industry Hi-tech Hainan’s economy, the local government hopes that
City Sanya
Pharma, medical device,
modern services and hi-tech industries will attract a
Key subsectors Li'an International Education growing talent pool, with policy support such as lower
Leading industry Hi-tech manufacturing, technology
Innovation Experimental Zone
personal income tax, and build a more varied and resilient
Deep-sea technology, City Lingshui
Key subsectors
agriculture economic base.
Leading industry Tourism
Key subsectors Education The establishment of eleven key industrial parks was
announced in June 2020 to attract relevant industries
and business, including five in Haikou and two in Sanya.
Sanya Central Business District
The eleven industrial parks contributed over 30% of tax
Sustainable
income for the whole province in 2019.
City Sanya
Leading industry Modern service Hainan, at the vanguard of reforms designed to attract
development
Headquarters, trade foreign investment, enjoys special policy advantages.
Key subsectors
business Hainan FTP’s 2020 negative list includes fewer industries
(27 items) than the national negative list (33 items) and
free trade zone negative list (30 items).
Selected construction projects, corporate signings and key projects
2018 2019 2020 2021
Nov Dec Mar May Jul Sep Oct Nov Jun Aug Oct Dec Feb
SF Express, CNPC, China CTG, Time China Seeds, iFly Airlines, Modetour, ALBA Group, Yankuang Electricite TUI Group, CNAF, Tesla GE, CHD, CTG, China China Post,
CSIC, Merchants Medical, Taiji, China iFlytek, Pacific Anchor Temasek, Group, De France, ITOCHU, New Energy, Sinomach, Schneider
Jointown, Group, Alibaba, WFL, Huawei, Minmetals Meinuoke, Centre for GLP Macalline, SinoChem, Oriental China Southern Airlines, Electric,
CNOOC, CRIC China Datang Funde Group Central Certification, Shenzhen Shenzhen Stock Sinograin, CNADC, CDP Group,
Cooperation, University of State Meian Exchange, PowerChina, CRM, Nankai Guangzhou
Oriental Airlines, University, GLP, BioPlus Jiacheng
Group, CP Finance and Development Technology
Juneyao Airlines,
Group Economics
Ctrip, Shell
Source Hainan Government, Savills Research
12 13Opportunities
Hainan enjoys an exclusive offshore duty-free policy.
Travellers leaving Hainan (but not the country) have an
Duty-free annual duty-free quota of RMB100,000 per year. The island
had nine offline duty-free shops by the end of January 2021
stores and is expected to see more in the coming months and years.
The duty-free market in Hainan will play an important role in
attracting outbound tourism expenditure back to China. In
2020, duty-free sales increased 104% YoY, with luxury sales
accounting for around 7 to 9%, according to Bain & Co.
Cruise liner and yacht charter firms not only provide tourists
with a richer experience but can also potentially benefit
related industries. Hainan could also link up with other
popular tourist destinations along the Belt and Road to
Cruise
improve its offerings.
Sanya Phoenix Island International Cruise Port plans to
establish itself as a home port for the cruise shopping
industry, attracting more international cruise firms. More
policies, such as the loosening of registration thresholds and
cruise ship logistics tracking, are expected to be rolled out
soon.
An increased emphasis on cultural tourism could enhance
Hainan’s tourism market. Compared to the island’s plentiful
natural resources, Hainan’s cultural elements are still
Culture underdeveloped. Hainan has just six 5A national tourist
attractions, compared to 279 for the whole country.
Hainan’s culture industry saw 17.7% growth in 2020 despite
COVID-19. Haikou Fullsing Town Internet Innovation Park has
already attracted well-known companies such as Alibaba
Pictures and Aiqiyi Innovation Centre.
Tourism
Tourism visitor time YoY growth rate
Foreign HK Macau Domestic
100%
75%
50%
Building on a firm foundation 25%
0%
Hainan, as a tropical island, enjoys The majority of visitors to Hainan are tremendous potential for further growth. -25%
a comfortable climate and abundant from the mainland, with Chinese domestic However, it still needs to upgrade its
natural resources. Tourism has become tourists accounting for 96.3% of visitors tourism offerings from products to -50%
the province’s pillar industry. Revenue over the past decade. Nevertheless, services—for example, the number of -75%
from tourism grew at a compound annual starting in 2018, 59 countries were granted international flights to Haikou and Sanya
growth rate of over 10% between 2010 and 30-day visa-free access to Hainan, helping needs to increase to extend coverage -100%
2019, while its share of GDP increased to to stimulate double-digit growth in to countries that have access to visa-
2012-07
2013-05
2014-03
2015-01
2015-11
2016-09
2017-07
2018-05
2019-03
2020-01
2020-11
8.5%. Tourism revenue fell by 10.8% in overseas visitors, though it remains a very free travel. The industry also needs to
2020 as a result of the pandemic. However, small share of total tourist numbers. develop more attractions and improve the
with a strong second half, tourism still services on offer to maintain its attraction
managed to account for 7.3% of the year’s While it is one of China’s most developed to existing tourists and competitive
Source Hainan Statistics Bureau, Savills Research
economic output. tourist destinations, Hainan still has advantage over competing locations.
14 15Opportunities Opportunities
The medical-related industries output increased 11% per Hainan’s internet industry is one of the fastest-
Enhancing annum over the last three years, accounting for 3.5% of
the province’s economy by 2020. Hainan’s subtropical
The future growing sectors in recent years, with its industrial
output increasing by 32% in 2020 alone. Companies
industry
to tropical climate is deemed a suitable setting for are concentrated in Hainan Resort Software
Hi-tech
Medical developing the medical care and nursing home industry,
similar to retirement communities such as Florida. Other Internet Community and Fullsing Town Internet Innovation
Park, contributing 63% of revenue.
related sectors, such as medicine and medical devices
production, are also growing rapidly. The internet industry will continue to expand rapidly
Modern
in the coming years, with plans to make it a trillion
Bo’ao Lecheng International Medical Tourism Pilot Zone RMB industry by 2035, representing an annualised
plans to be at the forefront of China’s medical and health Hainan was home to 838 government- growth rate of 26% over the next 15 years.
care field reforms. The pilot zone plans the only storage certified hi-tech companies by the end
of 2020, growing by more than 40% per
services
warehouse for innovative medicine and medical devices.
annum for the last three years. Of the
eleven key industrial parks, six target the
Hainan plans to prohibit the sale of diesel and petrol
hi-tech sector. Haikou National High-tech vehicles by the end of 2030, instead relying upon
The growth in the MICE industry will lead to growth
Industrial Development Zone, the only NEVs. Hainan NEV sales increased 142.5% in 2020 with
in related industries such as transportation, F&B and
national-level industrial park in Hainan, 31,200 new NEVs registered, three times the original
accommodation, which accounted for 88% of revenues in
Hainan’s modern service sector,
which accounted for 29.1% of GDP,
2020.
saw hi-tech companies contribute over 70%
of the park’s total output.
NEV plan.
recorded the fastest growth of the
three leading industries in 2020,
Exhibition Hainan has already established several exhibition series,
Traditionally, Hainan is not particularly
The automobile sector has a long value chain. Tax
support for imported vehicle manufacturing and
namely Bo’ao Forum for Asia and the World New Energy
growing by 10.9% YoY. Haikou and Vehicle Congress (WNEVC). The China International strong in hi-tech industries, except for the assembly would significantly benefit the development
Sanya account for 43% and 15% Consumer Products Expo or “Hainan Expo” will be added marine and aviation sectors. There are, of Hainan’s industrial base.
of the island’s tertiary industry, to this growing roster in the future. however, opportunities to cooperate and
respectively. According to Oxford coordinate with the GBA economies to help
Economics, Haikou’s tertiary the island attract businesses and talented
industry is expected to triple in the workforces.
next 15 years to over RMB400 billion, Hainan also enjoys significant policy support for future Hainan has a strong base of marine and aviation
bringing new demand to the city’s financial reform. For example, there is no minimum industries and R&D capabilities, with the majority
Hainan is also investing in modern
office market. entry threshold requirement for Qualified Foreign
Limited Partnership (QFLP) enterprise registration to
infrastructure to assist with the Ocean of companies located in Sanya Yazhou Bay Science
and Technology City and Wenchang International
attract foreign investment.
development of smarter cities and & Aerospace City. As a pillar industry of Hainan, the
A more open economic policy
structure will be particularly Finance Financial services are key to the goal of free trade
communities. The island allows for
foreign investment into the value-added aviation marine industry accounts for 36.3% of the province’s
GDP.
beneficial to tertiary industries and investment. Several banks have already accepted telecommunication field, while restrictions
such as trade and business services, applications for free trade accounts to facilitate cross- in online data processing and transaction
while a maximum individual income border capital transfers. processing have also been removed.
tax of 15% will be attractive to Registered enterprises with service facilities Internet industry output growth rate, 2016-2020
local and international companies in Hainan are also allowed to develop data
and individuals from high-paying Output of selected service sectors, 2018-2020 centres and content distribution platform
industries such as finance and hi- 35%
services in Hainan and internationally.
2018 2019 2020
tech R&D. More internet companies are expected to
30%
15% benefit from further opening up.
Hainan’s 2020 foreign investment
10% 25%
negative list, compared to other The National Development and Reform
parts of China, has further Commission (NDRC) is also supporting the
5% 20%
liberalised access to industries such development of the automobile industry
as education and business services. 0% in Hainan. Foreign-invested automobile
Overseas higher educational 15%
manufacturers in Hainan are no longer
institutions and vocational colleges 5% subject to foreign equity restrictions or 10%
specialising in science, engineering, -10% restrictions regarding the number of joint
agriculture and medicine can operate ventures producing similar products.
-15% 5%
facilities independently in Hainan, Meanwhile, the improvement of new
complementing local educational energy vehicle (NEV) infrastructure is also
-20% 0%
resources. in line with the government’s vision to
Healthcare Financial Exhibition Logistics Education 2016 2017 2018 2019 2020
services upgrade industrial bases while promoting
Source Hainan Statistics Bureau, Savills Research
sustainable development.
Source Hainan Statistics Bureau, Savills Research
16 17Incentives Incentives
Corporates Individuals
Tax discounts
1. orporate income tax (CIT) for encouraged enterprises will be capped at 15%. (Encouraged
C
enterprises refer to those whose main business falls under the “encouraged catalogue” and
account for over 60% of business revenues.)
2. orporate capital expenditures to be fully tax-deductible or to accelerate their
C
depreciation and amortisation.
3. Corporate tax exemptions for tourism, modern services and high-tech industry
enterprises on the income acquired from a new foreign direct investment
between January 1, 2020, and December 31, 2024. Talent
1.
Industry specific
aximum individual income tax of 15% for eligible talent (based on salary, professional
M
certificates or awards).
Manufacturing Trade Retail Aviation 2. oreign personnel are permitted to serve as legal representatives for legal
F
bodies, public institutions and state-owned enterprises.
3.
Enterprises importing Goods transiting and leaving Island residents are exempt Allow flights in and out of
production equipment and input the country via Yangpu Port from import duties, import Hainan to refuel with bonded
Eligible individuals are entitled to subsidies for the lease or purchase of a
materials for their own use are will be rebated at the port of value-added tax and aviation fuel. Expand air traffic
exempt from import tariffs, departure on a trial basis. The consumption tax on purchases rights to include the fifth and residential property.
import value-added taxes and import and export management of imported goods. seventh freedoms of the air.
consumption taxes. system of “first-line
liberalisation and second-line
control” will be implemented in
Yangpu Bonded Port Area.
Financial Automobile Consultancy Education
Support overseas securities, Foreign-invested automobile Restrictions on foreign Allow international higher Cross border
funds, and futures institutions manufacturers in Hainan are no investment in the field of market education institutions and
1.
to set up wholly-owned or longer subject to foreign equity research will be removed , except vocational colleges specialising
jointly-owned institutions in restrictions or restrictions the radio broadcasting and TV in science, engineering,
Hainan. No minimum entry regarding the number of joint ratings which must be controlled agriculture and medicine to 30-day visa-free access for foreign nationals from 59 countries.
threshold requirement for ventures producing similar by a domestic joint venture independently open campuses
QFLP enterprise registration. products. partner. in Hainan.
2. Pre-arrival registration can be made by individuals or through a travel agency.
3.
oreign nationals travelling to Hainan for trade or business purposes,
F
Exhibition Telecommunication Law Logistics visiting relatives, seeking medical care or attending conferences or
Duty-free import and sales of Open value-added Foreign firms can engage in Prioritise land supply for key sporting events can register for visa-free entry.
overseas exhibits at exhibitions. telecommunication business to non-litigation commercial logistics infrastructure.
foreign investment. affairs in Hainan.
18 19Central Management Research Siu Wing Chu James Macdonald CEO Senior Director China China +86 21 6391 6688 +86 21 6391 6688 siuwing.chu@savills.com.cn james.macdonald@savills.com.cn Woody Lam Chester Zhang Managing Director Director Southern China China +86 755 8436 7000 +86 21 6391 6688 woody.lam@savills.com.cn chester.zhang@savills.com.cn Cindy Wu Carlby Xie General Manager Director Hainan Southern China +86 898 3638 4226 +86 20 3665 4874 cindy.wu@savills.com.cn carlby.xie@savills.com.cn Savills plc is a global real estate services provider listed on the London Stock Exchange. We have an international network of more than 650 offices and associates throughout the Americas, the UK, continental Europe, Asia Pacific, Africa and the Middle East, offering a broad range of specialist advisory, management and transactional services to clients all over the world. This report is for general informative purposes only. It may not be published, reproduced or quoted in part or in whole, nor may it be used as a basis for any contract, prospectus, agreement or other document without prior consent. While every effort has been made to ensure its accuracy, Savills accepts no liability whatsoever for any direct or consequential loss arising from its use. The content is strictly copyright and reproduction of the whole or part of it in any form is prohibited without written permission from Savills Research.
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